IMF's "Bitcoin Blockade Order": Unveiling the Encryption Ban Clauses Behind the $45 Billion Loan

Original author: Daniel Batten, BitcoinMagazine

Reprinted: Daisy, Mars Finance

In recent years, the International Monetary Fund (IMF) has been weaving a network to curb the development of Bitcoin through a series of initiatives:

· Successfully forced El Salvador to abandon Bitcoin as legal tender and revoke some other Bitcoin policies.

· Successfully pressured the Central African Republic to repeal the Bitcoin bill in 2023 through regional banking institutions.

· The promise of Bitcoin made by Argentina's President Milei during the campaign failed to translate into actual action.

· Expressing "serious concerns" about Pakistan's Bitcoin plan

In loan negotiations, cryptocurrency is always regarded as a "risk."

The following is a summary table:

As we can see, the only countries that can resist IMF pressure are El Salvador (before 2025), which has not obtained IMF loans, and Bhutan. Every country that has accepted IMF loans and attempted to adopt Bitcoin at the national level has been successfully obstructed or largely thwarted by the IMF.

Why has the IMF been so successful in preventing countries around the world from adopting Bitcoin (except for Bhutan)? And why is it so proactive?

In this detailed report, we will conduct an in-depth analysis of three countries where the IMF has successfully resisted the adoption of Bitcoin, and point out the possibility of achieving the same result in Pakistan. In the final section of this report, we explore the five concerns the IMF has regarding Bitcoin, as well as the fact that despite various nation-states abandoning or partially abandoning Bitcoin from the top down, Bitcoin continues to thrive at the grassroots level.

1. Central African Republic: When Colonial Currency Meets Digital Hope

The Central African Republic (CAR) uses the Central African CFA franc. The CFA is not just a currency, but a geopolitical chain backed by France and managed by the Bank of Central African States (BEAC). Among its 14 member countries, 6 Central African nations (including CAR) are still required to keep 50% of their foreign exchange reserves in Paris.

This control over foreign exchange reserves has led to economic dependence, while also establishing a favorable export market for French goods. For example, in 1994, under pressure from the West (especially the IMF), the CFA was devalued by 50%, causing import costs to soar, while exporters (mainly from the EU) could obtain resources from CFA countries at half price. Locally, this impact was devastating, resulting in widespread wage freezes, layoffs, and large-scale social unrest.

When the Central African Republic announced the adoption of Bitcoin as legal tender in 2022, the BEAC and its regulatory body, the Central African Republic Business Advisory Council, immediately declared the law invalid on the grounds that it violated the treaty establishing the Central African Economic and Monetary Community. This is not bureaucratism, but a warning from the guardians of the "Francafrique" currency.

Why is it important? To this day, the Central African Republic's economy heavily relies on IMF assistance, and its external debt of 1.7 billion dollars (61% of GDP) means that defying BEAC will face the risk of financial isolation.

The IMF's Quiet Actions

The IMF acted swiftly. On May 4, 2022, within two weeks, the IMF publicly condemned the "dangerous experiment" of the Central African Republic, stating that it conflicted with the cryptocurrency ban of the Central African Economic and Monetary Community. The IMF indicated that this move raised "significant legal, transparency, and economic policy challenges," similar to previous concerns regarding El Salvador's adoption of Bitcoin: risks to financial stability, consumer protection, and fiscal liabilities (notably, these risks have not materialized in El Salvador).

But their real weapon is leverage. As the largest creditor of the Central African Republic, the IMF has linked the new $191 million medium-term credit arrangement to policy compliance.

Timeline Revealed

The table below traces the behind-the-scenes actions of the IMF:

The key to thwarting the Central African Republic's Bitcoin ambitions is to ensure that the Sango project (a blockchain initiative launched by the Central African Republic government, aimed at selling "electronic residency" and citizenship for $60,000 in Bitcoin) does not proceed.

Sango project, coincidence or collusion?

In July 2022, the Central African Republic launched the Sango project, aiming to raise $2.5 billion, equivalent to the country's annual GDP.

The Sango project was unsuccessful. By January 2023, it had raised only $2 million (0.2% of the target). The IMF reported that the reason for failure was "technical barriers with an internet penetration rate of only 10%", but our analysis reached a completely different conclusion. Two factors destroyed the Sango project:

· Investor loss

A ruling by the Supreme Court of the Central African Republic has blocked the Sango project.

However, a closer examination suggests the involvement of the IMF in both factors.

· Investors flee

The role played by the IMF in this process is indirect, yet compelling.

On May 4, 2022, the IMF expressed concerns about the Central African Republic's adoption of Bitcoin, stating that it poses significant legal, transparency, and economic policy challenges. This statement was made before the launch of the Sango project, highlighting the risks to financial stability and regional economic integration, which could deter investors.

In July 2022, during a staff visit for the program review under the supervision of the staff, the IMF pointed out that "the economic downturn caused by rising food and fuel prices" could exacerbate investor caution.

The report also mentioned that the IMF and the Central African Republic Business Advisory Council warned about the inherent risks of the Central African Republic's cryptocurrency initiatives, further exacerbating people's concerns.

The timing of these IMF statements coincides with the observed flight of investors, indicating that its cautious stance as an authoritative financial institution may have influenced market perception among the investor community.

Supreme Court ruling

On the surface, the Supreme Court ruling appears to be an independent event, but a deeper investigation reveals doubts about the independence of the Central African Republic's judicial system—the country's corruption perception index ranks at 149/180 (extremely low).

As mentioned earlier, one week after the Central African Republic announced its Bitcoin strategy, on May 4, 2022, the IMF expressed "concerns" regarding risks to financial stability, transparency, anti-money laundering efforts, and macroeconomic policy management challenges due to volatility.

On August 29, 2022, 117 days later, the CAR Supreme Court ruled that the Sango project was illegal. Transparency international organizations (such as Gan Integrity) stated that the Supreme Court, which is part of the Central African Republic judicial system, is one of the most corrupt institutions in the country, facing issues such as inefficiency, political interference, and potential bribery or political pressure.

The collapse of the Sango project has become "Evidence A" for the IMF: "proving that Bitcoin cannot operate in fragile economies." But the reality is that the IMF's ongoing expressions of "concern" prematurely damaged the project environment, making this conclusion possible.

5,200 miles away, in the small country of Bhutan, we saw a completely different scene: Bitcoin successfully took root without the "involvement" of the IMF.

The obvious conclusion: Bitcoin's resilience transcends borders.

The reversal in the Central African Republic is not about the viability of Bitcoin, but about power. The IMF used a coalition of regional banks to cut off capital sources in the Central African Republic and leveraged $191 million in loans to eliminate threats to financial sovereignty. When the Sango project got bogged down, the trap suddenly closed the net.

However, this failure also reveals the enduring power of Bitcoin. Note what the IMF failed to destroy:

· Bitcoin remittances in Nigeria still bypass dollar channels, saving millions in fees.

• Bitcoin trade in Kenya thrives without IMF approval.

· El Salvador continues to increase its Bitcoin holdings despite mentioning Bitcoin 221 times in the loan conditions.

The model is clear: where grassroots adoption takes root, Bitcoin can survive. However, countries that announce top-down Bitcoin plans while burdened with large IMF loans have all faced overwhelming resistance: El Salvador, Central African Republic, Argentina, and now Pakistan.

The unpaid balance of $115.1 million in IMF loans in Central Africa subjects it to IMF pressure. In countries like Bhutan that have no IMF loans, Bitcoin slips through the IMF's fingers. Every peer-to-peer payment and every Lightning Network transaction erodes the foundations of the old system.

The IMF has won this round in the Central African Republic, but the struggle for global financial sovereignty has only just begun.

2. Argentina's $45 billion Bitcoin adoption barrier

If the Bitcoin plan of the China-Africa Cooperation is thwarted, Argentina has never even started. President Milei hinted at significant actions in his pre-election statements, but ultimately there was no progress. Is this just empty talk from politicians during the election, or is there more to the story? This section will reveal the truth behind the failure of Argentina's Bitcoin plan.

Understanding the progress of Bitcoin adoption is like assessing whether a rocket can achieve escape velocity: we must examine both thrust and resistance.

I am an optimist: I believe Bitcoin will win because it is clearly a better solution to our currently broken fiat currency system. But I am also a realist: I think most people underestimate the power of the conservative forces opposing Bitcoin.

When I was running a tech company, we encountered the same situation. Our technology was 10 times better than traditional systems, faster and more cost-effective, but they weren't willing to easily give up their existing monopoly.

What happened in Argentina?

When the liberal Javier Milei was elected president of Argentina in November 2023, many Bitcoin advocates cheered. This leader called central bank officials "frauds," vowed to abolish the Argentine central bank, and praised Bitcoin as a "natural response to central bank frauds." This case has become a touchstone for testing whether Bitcoin can gain mainstream recognition through government adoption rather than grassroots growth.

But 18 months into his presidential term, Milei's Bitcoin vision has yet to be realized. What is the reason? The IMF's $45 billion fund controls the development of Bitcoin in the country.

IMF's veto power in Argentina

Restrictions had already existed when Milei was elected. On March 3, 2022, the previous Argentine government signed a $45 billion IMF bailout agreement. In the following weeks, details revealed that the agreement included an unusual clause: a requirement to "prevent the use of cryptocurrencies." This was not a suggestion, but a loan condition recorded in the IMF's letter of intent, which mentioned concerns about "financial disintermediation."

Direct Impact:

· The Central Bank of Argentina prohibits financial institutions from engaging in cryptocurrency trading.

· Despite Milay's pro-Bitcoin remarks, the policy was still enforced during his term.

Mila's turn

After Miley took office:

· Reduce the monthly inflation rate from 25% to below 5% (May 2024)

· Cancel currency control (April 2025)

· Obtain a new $20 billion IMF agreement (April 2025)

But the core proposals in his declaration (adoption of Bitcoin and abolition of the central bank) are noticeably absent. The reason is simple: Argentina owes more debt to the IMF than any other country, giving the IMF unparalleled leverage.

However, the case of Argentina is ironic: despite the IMF's efforts to prevent official Bitcoin adoption, Argentinians are still embracing Bitcoin. Between 2023 and 2024, cryptocurrency holdings in South America grew by 116.5%, with Argentina having the highest holding rate in the region at 18.9%, nearly 3 times the global average. Moreover, this proportion has surged due to citizens hedging against a high annual inflation rate of 47.3% (by April 2025). This is a quiet rebellion that the International Monetary Fund cannot control.

What will happen next?

All eyes are on the midterm elections in October 2025. If Milei gains support, he may challenge the IMF's red lines. But for now, the lesson is clear: when a country borrows from the IMF, its monetary sovereignty is restricted.

Key points

· The IMF's 2022 loan explicitly ties Argentina's bailout to anti-crypto policies.

· Milai prioritizes economic stability over advocating for Bitcoin in order to gain IMF support.

· El Salvador, the Central African Republic, and now Pakistan share similarities, revealing the IMF's consistent strategy.

· Argentinians are circumventing restrictions through grassroots Bitcoin adoption.

3. El Salvador: A Partial Victory for the IMF

When El Salvador designated Bitcoin as legal tender in 2021, it was not just the adoption of a cryptocurrency but also an announcement of financial independence. President Nayib Bukele saw it as a symbol of resistance against the dominance of the dollar and a lifeline for the unbanked. Three years later, this resistance faced a barrier of $1.4 billion: the IMF.

The cost of rescue

To secure a loan in 2024, El Salvador has agreed to abolish a key pillar of its Bitcoin policy:

· Voluntary acceptance: Enterprises are no longer required to mandatorily accept Bitcoin.

· Public sector ban: Government entities are prohibited from trading Bitcoin or issuing debt, including prohibiting tokenized instruments linked to Bitcoin.

· Bitcoin accumulation frozen: all government purchases halted (6000+ BTC reserves have now been frozen), and a comprehensive audit of holdings is required before March 2025.

· Trust Fund Liquidation: Fidebitcoin (Conversion Fund) will be dissolved under the premise of audit transparency.

· Chivo Wallet Phasing Out: Surveys show that most users will gradually end the $30 incentive program after converting BTC to USD.

· Tax rollback: The US dollar has become the sole option for taxation, eliminating the utility of Bitcoin as a sovereign payment.

Buckle's strategic retreat

The compromise of El Salvador has financial significance:

As the bond repayment approaches, loans have stabilized the debt (which accounts for 84% of GDP).

· Dollarization remains unchanged (the US dollar is still the primary currency)

However, considering Buckler's remarks in 2021, this regression is shocking. The low usage rate of the Chivo wallet may have driven its concessions.

What is left in the experiment?

The IMF has not killed El Salvador's Bitcoin, it has only stifled official adoption. Grassroots usage continues to exist:

· Bitcoin Beach is still operating and in fact thriving.

· The tourism industry is attracting more and more Bitcoin enthusiasts.

But without national support, Bitcoin's role may shrink to a niche tool in the short term, rather than a monetary revolution.

The Road of the Future

There are two scenarios for the future of Bitcoin in El Salvador:

· Slow Fading: As the IMF conditions come into full effect, Bitcoin becomes a curiosity for tourists.

· Shadow Revival: The private sector sustains its existence in the face of government retreat.

One thing is very clear: when the IMF writes a check, it also sets the rules.

Key Points

· IMF loans force El Salvador to reverse 6 key Bitcoin policies

· Set a precedent for other countries seeking IMF support.

· Grassroots Bitcoin usage may be more enduring than government involvement.

El Salvador has made many concessions on the issue of Bitcoin. While it can be argued that this does not harm El Salvador significantly, it sends a strong signal to other Latin American countries (such as Ecuador and Guatemala) that have been observing El Salvador and considering replicating its strategy (until they verify the scale of their own IMF loans). Therefore, overall, this is a partial victory for the IMF and a partial victory for El Salvador.

4. Bhutan: A Success Story of Breaking Free from the IMF

Bhutan's Bitcoin experiment has been underway for two years, which means we now have some reliable data on how it affects the economy.

The IMF warns that countries embracing Bitcoin will undermine economic stability, reduce the efficiency of attracting foreign direct investment, and jeopardize decarbonization and environmental initiatives. It particularly expressed concerns over Bhutan's crypto adoption due to its "lack of transparency."

What does the data say?

· Bitcoin reserves directly meet urgent fiscal needs. "In June 2023, Bhutan allocated $72 million from its Bitcoin holdings to raise salaries for civil servants by 50%."

· Bhutan can "use Bitcoin reserves to avoid a crisis as foreign exchange reserves have decreased to $689 million"

· Prime Minister Qilin Tuogeye stated in an interview that Bitcoin also "supports free healthcare and environmental projects."

Togye also stated that their Bitcoin reserves help to "stabilize the country's $3.5 billion economy."

Independent analysts indicate that "this model can attract foreign investment, especially for countries with undeveloped renewable resources."

Considering that the IMF's analysis is not only incorrect but almost completely reversed in its judgment, this raises a question: Is the IMF's forecast based on data?

5. Five Reasons the IMF May Be Concerned About Bitcoin

"Let all your friends, libertarians, Democrats, Republicans, let everyone buy Bitcoin - and then it will be democratized." John Perkins said at the Bitcoin conference in 2025.

What if the biggest fear of the IMF is not inflation... but Bitcoin? Can Bitcoin break the debt control of the IMF / World Bank?

In my recent conversation with John Perkins (author of "Confessions of an Economic Hitman"), some things became clear. Alex Gladstein had previously pointed out that the IMF's "structural adjustments" did not eliminate poverty but rather made creditor countries richer. Perkins supplemented this with his own firsthand accounts.

Perkins revealed to me how the Southern Hemisphere has fallen into a debt cycle: a design aimed at directing wealth towards the West. But the turning point is that Bitcoin has already dismantled this script in five key aspects.

1. Lower remittance costs to loosen the shackles of debt.

The sculpture by Chris Collins depicts the noose of debt.

Remittances (money sent home by migrant workers) often constitute a significant portion of GDP for developing countries. Traditional intermediaries like Western Union charge fees as high as 5-10%, which amounts to a hidden tax. For countries such as El Salvador or Nigeria, central banks must hold dollars to stabilize their national currencies, and these dollar reserves are often provided by the IMF.

Bitcoin changes the game.

With the Lightning Network, transaction fees are almost zero, and transactions are settled in seconds. In 2021, the President of El Salvador, Bukele, optimistically predicted that Bitcoin could save $400 million in remittance fees. However, the reality is that there is almost no evidence that remittance fees using Bitcoin have approached this threshold. Nonetheless, its potential is evident: more Bitcoin remittances will lead to higher dollar reserves, thereby reducing the need for loans from the International Monetary Fund (IMF).

No wonder the IMF mentioned Bitcoin 221 times in the loan conditions for El Salvador in 2025, as they aim to maintain their position as a relevant lending institution.

Bitcoin is not only cheaper for remittances but also completely bypasses the dollar system. In Nigeria, with a weak naira, families are now holding Bitcoin as a harder asset than the local currency. There is no need for central banks to deplete dollar reserves, nor for IMF bailouts.

Numbers speak for everything:

· Pakistan loses 1.8 billion dollars each year due to remittance fees, and Bitcoin can save most of it.

· El Salvador uses only 1.1% of Bitcoin remittances, saving over $4 million a year.

Currently, the application of Bitcoin has not been fully covered. Only 12% of Salvadorans regularly use Bitcoin, while over 5% of remittances in Nigeria are conducted through cryptocurrency. But the trend is evident: every Bitcoin transaction weakens the cycle of debt dependence.

The IMF sees a threat. The question is: how quickly will this silent revolution spread?

In 2024, the total remittances to Nigeria are close to 21 billion US dollars, accounting for more than 4% of GDP.

2. Avoiding sanctions and trade barriers

Oil-rich Iran, Venezuela, and Russia have been restricted in their access to US dollars due to American sanctions in 1979, 2017, and 2022 respectively, leading to a significant reduction in oil exports.

Whether we agree with the ideologies of these countries or not, Bitcoin has broken this cycle. Iran has been using Bitcoin to "export oil" to circumvent sanctions, while Venezuela uses Bitcoin to pay for imports and avoid sanctions.

Iran is also circumventing sanctions by monetizing energy exports for mining, avoiding the IMF's "reform for cash" ultimatum while keeping the economy running. As Russia and Iran take the lead in Bitcoin oil trading, the control of petrodollars is weakening.

Another country that uses Bitcoin to avoid sanctions-induced economic difficulties is Afghanistan, which utilizes Bitcoin for humanitarian aid. NGOs like "Incentive Code" have bypassed the Taliban's bank freezes, and the "Digital Citizen Fund" has provided aid using Bitcoin after the Taliban takeover, preventing some families from starving.

Afghanistan's "incentive code" non-governmental organizations use Bitcoin donations that the Taliban cannot intercept to train women in software development.

Although Bitcoin's share in sanctioned trade is small, accounting for less than 2% of oil exports from Iran and Venezuela, the trend is on the rise.

Sanctions are a key tool of geopolitical leverage, often supported by the IMF and World Bank, as they align with major economies such as the United States. Sanctioned countries use Bitcoin to reduce the IMF's control over the flow of funds while threatening the dominance of the dollar.

3. Use Bitcoin as a national inflation shield

When countries like Argentina face hyperinflation, they borrow dollars from the IMF to support their foreign exchange reserves and stabilize their national currency. However, once they are unable to repay, they ultimately face austerity policies or are forced to sell strategic assets at low prices. Bitcoin offers an exit, as it can serve as a global, non-inflationary currency that is not subject to government regulation and has the potential to appreciate.

El experimento de El Salvador muestra que Bitcoin puede reducir la dependencia del dólar. Al poseer Bitcoin, el país puede protegerse contra el colapso monetario sin necesidad de préstamos del FMI. Si Argentina hubiera asignado el 1% de sus reservas a Bitcoin en 2018, podría haber compensado más del 90% de la devaluación del peso ese año, evitando así la ayuda del FMI. La neutralidad de Bitcoin también significa que no hay una única entidad que pueda imponer condiciones, a diferencia de los requisitos de privatización o reformas impopulares exigidos por los préstamos del FMI. En términos de fomentar la adopción de Bitcoin, no tiene apalancamiento de deuda ni la larga historia del FMI como referencia. Sin embargo, debido al efecto Lindy (ver la imagen a continuación), Bitcoin se convierte en una alternativa más viable cada año.

Lindy Effect: The longer something has been successful, the more likely it is to continue being successful.

4. Bitcoin Mining: Converting Energy into Debt-Free Wealth

Many developing countries have abundant energy but heavy debt, deeply trapped in the quagmire of the IMF providing loans for infrastructure such as dams or power plants. When defaults occur, these loans require cheap energy exports or resource concessions. Bitcoin mining disrupts this model by converting stranded energy (such as flared natural gas or excess hydropower) into liquid wealth without the need for intermediaries or transportation costs.

Paraguay earns $50 million annually from hydroelectric mining, covering 5% of its trade deficit. Ethiopia made $55 million in 10 months. Bhutan is a standout: it holds $1.1 billion in Bitcoin (36% of its $3.02 billion GDP), and by mid-2025, its hydroelectric mining could generate $1.25 billion in wealth each year, repaying its $403 million World Bank and $527 million Asian Development Bank debts. Unlike IMF loans, the value appreciation of mined Bitcoin can serve as collateral for non-IMF borrowing. This model of monetizing energy without relinquishing assets frightens the IMF, as it undermines its control over the energy sector.

Bhutan's Prime Minister Tshering Tobgay stated that Bitcoin is a "strategic choice to prevent brain drain."

5. Grassroots Bitcoin Economy: Bottom-Up Forces

Bitcoin is not only applicable to countries but also to communities. In Bitcoin Beach in El Salvador or Bitcoin Ekasi in South Africa, locals have used Bitcoin for daily transactions, savings, and community projects such as schools or clinics. These circular economies are often initiated by charitable causes, aiming for self-sufficiency. In Argentina, inflation often exceeds 100%, and by 2021, 21% of people used cryptocurrency to preserve their wealth. If these models are promoted, it could reduce reliance on national debt financing projects, which is certainly something the IMF hopes to avoid.

The founder of Bitcoin Ekasi, Hermann Vivier, stated that his community was inspired by the Bitcoin Beach in El Salvador and has replicated their Bitcoin circular economy in South Africa.

Conclusion

By enhancing local resilience, Bitcoin weakens the IMF's "crisis leverage." Thriving communities do not require bailouts, thus the IMF cannot demand privatization to repay loans. In Africa, projects like Gridless Energy have already lifted 28,000 rural Africans out of energy poverty using renewable microgrids tied to Bitcoin mining, reducing the need for large projects supported by the IMF. If thousands of towns adopt this model, the dollar shortage will no longer matter, and trade can bypass the dollar system.

Although the IMF occasionally spreads misinformation about Bitcoin's energy consumption and environmental impact to hinder its adoption, its more powerful tool is to use its financial influence over debtor countries to "encourage" compliance with its vision of a future without Bitcoin.

The IMF has opposed El Salvador, the Central African Republic, and Argentina's adoption of Bitcoin. Now, they are opposing Pakistan's intention to mine Bitcoin as a nation-state. The expansion of these grassroots movements may force the IMF to take more direct measures.

Children in the poorest villages of South Africa learn to surf through the Bitcoin Ekasi project.

Grassroots Bitcoin economy empowers communities to thrive without IMF assistance. We need the power of the people to find new innovative ways to combat the blows from the IMF.